Taking a home loan? You can save a huge amount of money every year with the tax benefits offered by the Government of India under the Income Tax Act of 1961.
As a home loan borrower, you can claim tax exemption on principal repayment every year under Section 80C, interest payments under Section 24 (b), and an additional benefit on interest under Section 80EE if you are a first-time homebuyer.
The table below gives you a quick overview of how much you can save on tax with your home loan:
|Tax Benefits on Home Loan (FY 2021-22)|
|Income Tax Act||Tax exemption|
|Section 80C||Upto Rs 1.5 lakhs on principal repayment|
|Section 24(b)||Upto Rs 2 lakh on interest payment|
|Section 80EE||Additional benefit of upto Rs 50,000 on interest payment for first-time homebuyers|
The Section 80C of Income Tax Act allows home loan borrowers to claim income tax deduction of upto Rs 1.5 lakh on the principal amount repaid during the year.
There are certain conditions involved for claiming tax benefits under this section:
Under the Section 24(b) of the Income Tax Act, you can claim income tax deduction of upto Rs 2 lakh on the interest payments on your home loan.
Take a look at the conditions involved in claiming tax benefits under this section:
If you are a first-time homebuyer, you can claim tax deduction under Section 80EE. This section allows additional tax deduction of upto Rs 50,000 on the interest payment on home loan. In other words, this deduction is over and above the exemption of Rs 2 lakh allowed under Section 24(b).
Check out some of the conditions applicable in claiming tax benefits under Section 80EE:
This section was launched in the 2019 Union Budget by the Finance minister Nirmala Sitharaman with the purpose of boosting the “housing for all by 2022” programme.
Under Section 80EEA, homebuyers can avail an additional tax deduction of Rs 1.5 lakh on interest payment on the home loan. This is over and above the tax exemption limit of Rs 2 lakh allowed under Section 24(b).
While presenting the Union Budget for FY 2021-22, the Finance Minister extended the benefits under this section till March 31, 2022.
Conditions for claiming the deduction under this section are as follows:
You can avail bigger tax benefits if you are applying for a home loan jointly. In case of a joint home loan, you and all other co-applicants can claim income tax benefits individually. Each co-applicant is eligible to claim tax deduction of upto Rs 2 lakh on interest payment and Rs 1.5 lakh on principal repayment.
To be eligible for claiming tax benefits, make sure that every co-applicant is also the co-owner of the property.
As per the Income Tax Act 1961, the maximum tax deduction allowed on a home loan is as follows:
The owner of the house can claim tax exemption. In case of joint home loans, all co-borrowers can claim exemption (provided they are co-owners too).
Your spouse can only claim tax exemption if he/she is also a co-borrower and co-owner of the property.
Yes, you can claim income tax benefits on an under-construction property. The interest you pay on the loan can be claimed as deduction after you get the possession of the property.This interest can be claimed in 5 instalments starting from the year when the construction is completed.
Yes you can claim benefits under both Section 80EEA and Section 24(b), if you meet the criteria. However, you must first exhaust the limit under Section 24(b) before you can claim exemptions under Section 80EEA. Also, keep in mind that Section 80EEA allows tax exemption only on loans taken between 1 April 2019 and 31 March 2021.
You are allowed to claim tax benefits on the house that is self-occupied. However, if you have more than one property, you can claim any one as self-occupied. The other properties will be considered as rented out properties.
Disclaimer: The information available on this site has been gathered from publicly available sources and is accurate to the best of our knowledge. However, please be aware that the rates and other offers may vary based on your profile and may be subject to change without notice. Therefore, we advise you to verify the information before applying for any loan through this website. Magicbricks accepts no liability for any loss arising from the use of the information on this website. Refer T&C for the detail.
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*These calculators are only for illustrative purposes. These figures may or may not be applicable to your particular situation. Magicbricks will not be responsible for any loss or liability arising from the use of these calculators.